The Startup India Scheme is a government of India programme aimed at creating jobs and income. The purpose of Startup India is to produce and innovate goods and services, as well as to increase the employment rate in India.
The advantages of the Startup India Scheme include job simplification, financial assistance, government tenders, and networking possibilities. On January 16, 2016, Prime Minister Shri Narendra Modi launched Startup India. Let us understand more about the Startup India Benefits and Eligibility.
What is the Start-up India Scheme?
India’s start-up culture is thriving. The recent announcement of Cred and Meesho becoming unicorns has instilled hope among early-stage founders. The Indian government, too, wishes to capitalise on this positive feeling.
On January 16, 2016, India’s government launched the Startup India Initiative to accelerate the growth of start-ups. The three goals of the Start-up India project are as follows:
- Create a consistent stage for the whole start-up ecosystem to congregate.
- Encourage and facilitate entrepreneurship
- Promoting entrepreneurship not just in major cities, but also in rural areas.
Benefits of Startup India
The Startup India Scheme offers a variety of benefits to start-ups who register with it. In any event, in order to take advantage of these benefits, a company must be established as a start-up by the Department of Industrial Policy and Promotion (DIPP).
Startups are allowed to self-declare their adherence to specified labour and environmental rules. This self-declaration benefit is accessible for five years from the date of enrollment in the plan.
Start-ups are allowed a three-year tax exemption, as well as the best-licensed innovation administrations and assets specifically dedicated to helping start-ups defend their intellectual property.
1. Financial Benefits
The majority of startups are patent-based. It signifies they create or supply one-of-a-kind items or services. They must pay a high fee to register their patents, which is known as the Patent Cost.
The government will grant an 80 per cent discount on patent expenses under this arrangement. Furthermore, the procedure of patent registration and associated matters is expedited for them. In addition, the government pays the facilitator’s expenses in order to get the patent.
2. Income Tax Benefits
Startups are eligible for a number of tax breaks under the Income Tax Act. The government exempts them from paying income tax for three years following the incorporation year.
However, they can only use it after receiving a certificate from the Inter-Ministerial Board. They can also seek an exemption from capital gains tax if they invest in certain funds.
3. Registration Benefits
Everyone believes that forming and registering a business is significantly more difficult than running one. It is due to the lengthy and difficult registration process.
An application is available to ease registration under the Startup India initiative. A single meeting has been scheduled at the Start-up India centre. There is also a single question and problem-solving window for them.
4. Government Tenders
Because of the high compensation and enormous projects, everyone wants to get their hands on government tenders. However, obtaining government bids is difficult.
Startups are given precedence in government tenders under this plan. They are also not essential to have any previous experience.
5. Huge Networking Opportunities
The ability to interact with diverse startup stakeholders at a certain location and time is referred to as networking opportunities. The government gives this chance by hosting two startup festivals each year (both at the domestic as well as international level).
The Startup India initiative also includes a workshop and knowledge on intellectual property.
What is Startup India Registration?
The Start-up India Registration Scheme is the Indian government’s flagship project to create a healthy ecosystem for nurturing innovation and start-ups in the country. The registration process for new businesses on the Start-up India platform is straightforward. Creating a profile on the start-up India hub is an easy procedure.
We may begin by clicking on the “Register” option in the upper right-hand corner of the start-up India scheme’s home page, which will bring us to the “mygov” platform for authentication, where we will be requested to fill in data like as our name, email address, and so on.
This will provide the user with an OTP, or one-time password, for verification, as well as a link to create a new password. The user may then sign in using the new login credentials he created. This will transport him to the Hub, where he may choose and build the profile of a stakeholder that best describes his function.
To register on the Start-up India portal, you will require the following documents:
- Certificate of incorporation/registration.
- Company details
- Details of directors/partners
- Pitch deck
- Revenue model
Who can Register in Start-Up India?
The type of the company determines eligibility for registration under the Start-up India Scheme. If a Private Limited Company (Pvt. Ltd. Co.), a Partnership Firm under Section 59 of the Partnership Act, 1932, or a Limited Liability Partnership (LLPs) under the Limited Liability Partnership Act, 2008 meets the following conditions, it can register under the Start-Up India scheme:
- The date of business registration should not have been more than 10 years ago.
- The yearly revenue of the organisation for any fiscal year since its registration shall not exceed INR 100 crores.
- The entity’s ais and objectives should be innovation and development. It should encourage the production of jobs and wealth.
- An enterprise is not founded by severing or reconstructing an existing firm.
- Start-ups developing novel solutions in fields such as social impact, waste management, water management, and so on.
Action Plan of Startup India Scheme
Startup India’s action plan is based on the following factors:
1. Simplification of Work
This effort streamlines the work for new entrants in order to inspire them. This covers the following measures done by the government:
- To begin, the government has established Startup India centres where all work relating to incorporation, registration, grievance resolution, and so on may be completed.
- Second, the government has created an application and an internet gateway to allow for registration from anywhere and at any time.
- Third, the purchase and registration of patents is now a quick process for companies.
- Finally, the Insolvency and Bankruptcy Bill of 2015 makes it easier to wind up startups quickly. Within 90 days after incorporation, a new startup can be shut down.
2. Finance Support
The government offers numerous financial incentives to entrepreneurs in order to encourage them. The following are the actions taken by the government:
The government has established a corpus of Rs.10,000 crores for a period of four years (Rs.2500 crore each year). The government invests in several firms using this money.
Special funds are made available, and investment in them results in a capital gain exemption from income tax.
For the first three years following formation, startups are free from paying income taxes.
According to the Income Tax Act, if a Startup (business) gets any consideration for the issuance of shares that exceeds the Fair Market Value of the shares, the excess consideration is taxable in the recipient’s hands as Income from Other Sources.
This clause does not apply to venture capital funds’ investments in startups. The same holds true for incubator investments in startups.
You can get all of the Startup India action plan alerts right here.
Challenges faced by Startup India
- People commonly believe that starting a business is just conceiving of a fresh concept or strategy. In actuality, however, carrying out such a strategy is more important than simply contemplating it.
- The government’s vision or viewpoint on the Startup India programme is fairly short-term in nature. It does not consider the startups’ long-term trajectory.
- A qualified personnel is required for the success of every new firm. However, in the case of startups, specialised labour is not possible owing to a lack of funding in the early stages.
- Startups face a higher chance of failure than other types of enterprises. It’s because they move at a breakneck pace.
Frequently Asked Questions
1. Which Registration is Best for a Start-Up?
Private Limited Companies and Limited Liability Partnerships are the most popular company forms for new businesses ( LLPs). A Private Limited company is more credible. Investors like to invest their money into private corporations, and the government encourages the formation of such corporate structures.
The second most popular form selected by start-up founders is a limited liability partnership. An LLP is a separate legal entity, and the partners’ responsibility is restricted. It has fewer compliances than a private corporation, thus entrepreneurs who do not want to be burdened with legalities choose an LLP form.
2. Can a Foreign Company Register Under the Startup India Hub?
The Startup Scheme is open to any firm with a registered office in India. However, the initiative does not make it easier to register foreign-incorporated corporations. If a foreign firm has a subsidiary in India, the subsidiary can register under the Startup Scheme if all of the applicable conditions are met.
3. For how long is a company recognized as a start-up?
Any business entity that has completed ten years from the date of its registration and has exceeded the previous year’s turnover of 100 crores will no longer be regarded as a start-up under the Startup India Scheme after ten years.